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Luxury brands ride high in online trade dispute

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The European Union’s competition regulator made an important move this week, issuing revised rules governing the sale of goods and services over the Internet in Europe.

The so-called “vertical restraints block-exemption regulation”, unveiled on Tuesday, set down new guidelines for online retailers who don’t operate a ‘bricks-and-mortar’ outlet. In doing so, it sought to resolve a debate that has been going on for years between luxury brand retailers such as Gucci and Chanel and discounters who sell big-name brands more cheaply from warehouses over the Internet.

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If how quickly a company sends out a press release welcoming an EU decision is a measure of how popular that decision is, then the European Commission’s updated rules were just what luxury goods manufacturers were waiting to hear.

The European Alliance, which represents three-quarters of global luxury brands, and French luxury group LVMH immediately applauded the move, saying it recognised their arguments that image and exclusivity are essential to their multi-billion euro industry.

In essence, manufacturers can now bar online retailers that don’t have bricks-and-mortar outlets from distributing their products.

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